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Is India paying too much for Rafale?

By MOHAN GURUSWAMY
November 15, 2019 19:48 IST

'What the price will reveal, since the India specific capabilities haven't changed since 2013, is how much the Modi government padded up the cost,' points out Mohan Guruswamy.

IMAGE: The Rafale fighter jet. Photograph: Christophe Simon/Reuters
 

On December 14 last year, the Supreme Court had ruled that there was no reason to doubt the decision-making process behind the Rafale jet deal.

It reaffirmed its position on November 14, 2019.

The Supreme Court's order, however much the government may make it seem, does not mean exoneration from corruption.

It relates to the process.

Even in terms of the process, there are some questions.

For instance the Acceptance of Necessity (AON) the required to set off the acquisition process was given after Prime Minister Narendra Damodardas Modi during an official visit to France in April 2015, announced that India would acquire 36 fully built Rafales, citing 'critical operational necessity'.

The Defence Acquisition Committee meeting, chaired by then defence minister Manohar Parrikar, to grant AON was only held in May 2015.

Though the Defence Procurement Procedure 2013 (DPP) very clearly lays out the sequence of steps, the AON came as an afterthought.

The DPP also specifies that where the procedure has been deviated such procurements will be done based on an Inter Governmental Agreement (IGA) after clearance from the Competent Financial Authority (CFA).

The CFA for procurement cases valued at more than Rs 1,000 crores was the Cabinet Committee on Security.

The IGA is typically an assurance from a sovereign foreign government for assistance in case of unforeseen problems -- for example, international sanctions, contractor failure, need to integrate more sophisticated weaponry, requirement of product support etc.

lGA also facilitates and strengthens the foreign industry's commitment for long-term support for the equipment and spares through a matching commitment by a sovereign government.

In the case of the Rafale purchase no such IGA was sought or obtained.

The IAF was hoping for a minimum of four squadrons or 72 Rafale fighters, but the Modi government has kept the initial order down to 36 fighters in a flyaway condition for 7.8 billion euros or $9.13 billion (@1 euro=$1.17).

Commenting on this, the officer who headed the intensive selection process that led to the choice of the Rafale, Air Marshal M Matheswaran (retd), who was involved in the original 126 fighters purchase process observed, 'The original MMRCA tender was cleared for $10.5 billion for 126 aircraft.'

This is the crux of the issue.

Is India paying too much for this fine fighting aircraft?

The Modi government has begun to pay French vendor Dassault Euro 7.85 billion for 36 Rafale fighters, or an average-per-fighter cost of Euro 217 million.

That is 40% higher per aircraft than Dassault's quote of Euro 19.5 billion for 126 fighters -- or Euro 155 million per Rafale -- that it submitted in response to an eventually aborted tender issued in 2007.

Now something about the next controversy about the 'India specific capabilities' built into these 36 Rafales.

In the Air Staff Qualitative Requirements' (ASQR) provided by the Indian Air Force, there were 13 'India Specific Enhancements' India demanded during the 126 aircraft MMRCA contract.

These included radar enhancements, helmet mounted display, towed decoy system, low band jammer and the ability to operate from high altitude airfields.

That these were the same for the 36 Rafales ordered by Modi is made clear by the Joint Statement dated April 10, 2015 issued by then French president Francois Hollande and Modi which reads '...that the aircraft and associated systems and weapons would be delivered on the same configuration as has been tested and approved by the Indian Air Force'.

The comparable costs of the 126 and 36 deals can only be read when all the costs are factored in.

The cost of the new deal for 36 Rafale fighters is 3.42 billion euros as the cost of the bare planes; 1.8 billion euros for associated supplies for infrastructure and support; 1.7 billion euros for India-specific changes to the plane; and 353 million euros for 'performance-based logistics support'; with the weapons package of 700 million euros being the extra.

What is new here are the performance based logistics support and the weapons package.

So take out 1,053 million euros out and you have the comparable cost, which means it is 7.1 billion euros.

It appears that the fiddle is in the India specific costs, additional infrastructure and support, and performance logistics support.

The first MMRCA deal also would have included India specific specifications, as is in the case of the IAF's SU30MKIs.

Thus, for comparison sake the argument can be made that 36 Rafales now cost 7.1 billion euros while 126 Rafales in 2012 cost 7.75 billion euros.

IAF 'spokesmen' have been justifying the Rafale purchase because the package includes the Meteor air-to-air missile.

The Meteor is an active radar guided beyond-visual-range air-to-air missile (BVRAAM) developed by MBDA.

It will offer a multi-shot capability against long range maneuvering targets in a heavy electronic countermeasures (ECM) environment with range in excess of 100 kilometres.

The Meteor is said to be five times as lethal as a conventional equivalent such as the American AMRAAM carried by Pakistan air force F-16 fighters.

The Meteor is not exclusive to the Rafale.

The fact is that the Swedish Gripfen has now been integrated with the Meteor and open sources indicate that the IAF too is contemplating integrating the SU-30MKI and Meteor.

Even the Tejas can be fitted out with Meteors.

So we are not buying the Rafale for the Meteor.

The cost of procuring Meteors is hard to come by.

Limited figures came to light in Germany in 2013.

The Luftwaffe will acquire 150 missiles at a cost of around $323 million, plus a further $175 million for integration.

That compares favorably with a price tag of $423 million for 180 AIM-120Ds, which the Pentagon paid in 2012.

Today each Meteor will cost about 2.5 million euros each.

I don't think the IAF will need more Meteor missiles than the USAF or Luftwaffe.

Missile purchase can never be part of the capital cost of a fighter.

Since they are expendable, and presumably meant to be expendable, they should be part of revenue expenditure.

When Chief Justice Ranjan Gogoi asked IAF officers as to when was the last induction of advanced fighter jets, Air Vice Marshal T Chalapati testified that this was in 1980s in the shape of Mirage aircraft.

No wonder Chief Justice Gogoi said: 'That means from 1980s till date there have been zero addition.'

This testimony is not correct.

This interaction took place in the presence of Air Marshals Anil Khosla, the vice chief, and V R Choudhari, the deputy chief, and Additional Defence Secretary Apurva Chandra.

They were quiet.

The IAF inducted the SU30MKIs from the mid 1990s onwards and has over 240 of these fighters.

The more recent deliveries have electronics comparable with the current state of the art.

The aircraft may be classified as 3.5 Gen by the AVM, but that is because it was designed in that time period.

But to impute that the same plane made in 2010 is limited to that times capability is also rubbish.

Technology moves on and even airframes, while essentially the same, change to enhance aerodynamics and stealth capability.

For that matter, the Rafale prototype was up and flying in the late 1980s.

I saw it in at the Farnborough air show in 1988.

So how is it 4+ Gen? The SU27 -- the forerunner of the SU30 and SU35 -- made its debut in Paris in 1987.

Finally, to insist that letting the overall unit price be known will reveal the true capability of the new Rafales is a complete concoction and figment of imagination.

What the price will reveal, since the India specific capabilities haven't changed since 2013, is how much the Modi government padded up the cost.

MOHAN GURUSWAMY
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